Hosting Syrian refugees - the cost conundrum

In a speech to parliament on 3 November, King Abdullah II said the presence of 600,000 Syrian refugees in Jordan has put “enormous pressure” on his country’s infrastructure.

“If the international community does not move quickly to help us shoulder the burdens of the Syrian crisis, I repeat and emphasize that Jordan is able to take measures to protect the interest of our people and country,” local and international media quoted him as saying.

Last month, the minister of planning said the Jordanian government had spent US$1.7 billion in responding to the influx of refugees and would need to invest $870 million more in the coming years on capital projects.

Jordan is also home to nearly two million Palestinian refugees, most of whom are Jordanian citizens, and tens of thousands of Iraqi refugees (29,000 are registered with the UN Refugee Agency, UNHCR, but the government says there are 450,000).

Turkey says it has spent more than $2 billion hosting hundreds of thousands of Syrian refugees; and the World Bank last month predicted the Syrian crisis will have cost Lebanon $7.5 billion in economic losses by the end of 2014. Across the region, there are more than 2.2 million Syrian refugees, according to UNHCR.

So what are the costs of hosting refugees? And can there also be economic benefits?

Refugees and aid operations can have positive effects on local economies. Syrian refugees are renting apartments; international aid workers, journalists, and diplomats with higher purchasing power have injected money into hotels and restaurants; and aid agencies have hired hundreds of local staff in each of the neighbouring countries.

Jordanian economist Yusuf Mansur argues Jordan’s economy would have had negative growth last year, had it not been for the influx of refugees.

Do Syrian refugees “steal” jobs from locals?

The International Labour Organization (ILO) estimates that some 160,000 Syrians are working in Jordan without permits. In many of the areas populated by refugees, more than 15 percent of the Jordanian population is unemployed, according to the Jordanian government.

Government officials often claim that Syrians are stealing Jordanian jobs. The contention is commonplace; it dominates radio phone-in shows and café chatter. But aid workers have questioned its veracity and independent Jordanian economist Yusuf Mansur believes this assumption is “stupidly over-exaggerated”.

“Only 5 percent of Jordanians in our labour force go to menial day type jobs. This is where Syrians are going,” he told IRIN. “So the impact on the labour market is totally over-exaggerated.”

Syrians are in fact competing with Egyptians, who have traditionally taken the country’s lower-paid jobs, he said.

ILO is about to begin an assessment of the impact of Syrian refugee flows on the country’s labour market.

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“The Syrian crisis as a whole has proved to be in many respects a boon to Jordan,” he said, citing increased foreign direct investments, especially in industry, and an influx of craftspeople, which Jordan lacks.

But refugees also present a big economic burden. For instance, significant additional government expenditure is required to meet the extra demand for water, electricity and municipal infrastructure from more than 400,000 Syrian refugees living in Jordan’s towns and cities, where they have nearly free access to education, health care and state subsidized products.

This burden is partly offset by international financial aid. The UN and its partners have received nearly two thirds of the $977 million they appealed for in 2013 to help Syrian refugees in Jordan; but Jordan’s foreign minister said recently the funding the government has received does not even cover 30 percent of the costs of hosting. The government appealed for $449 million in June.